BUKHATIR GROUP

Strength through Diversity

Group Policy and Procedure

Group Supply Chain (GSC)

Framework Agreements & Blanket Orders

Long-Term Arrangements, Call-Off & Rate Contracts

Document No: P-POL-026

Copyright © 2026 Bukhatir Group

Revision Control

This document is issued under the authority of Bukhatir Group and applies when carrying out the activities described. Revisions may be issued as necessary under the authority of the Group Head of Procurement. Revision history is recorded below with every revised policy.

Revision History

Revision Sign-Off

Distribution List

1. Purpose & Objective

This policy establishes long-term framework supply arrangements for recurring procurement requirements. Frameworks optimize pricing through volume aggregation, reduce PO cycle time via call-off mechanics and build stable supplier relationships.

2. Scope

Applies to all procurement categories where recurrent demand exists and spending justifies framework investment.

3. When to Establish a Framework Agreement

Frameworks are established when one or both of the following criteria are met:

• Recurring annual spend in a category exceeds AED 100,000.
• The BU(s) place more than 3 POs to the same supplier within a 12-month period for the same commodity/service.

Frameworks enable GSC to negotiate terms once, deploy at scale and avoid repetitive negotiations. Smaller, one-off procurements continue via standard RFQ process.

4. Framework Agreement Types

Type 1: Framework Agreement (Call-Off Based)

• Structure: Master terms, pricing schedule, volume estimates; no fixed quantity commitment.
• Call-Off: BUs raise call-off POs referencing the framework without re-quoting.
• Flexibility: Framework accommodates volume variations and mix changes.
• Usage: Ideal for commodity supplies, consumables, services with variable demand.

Type 2: Blanket Purchase Order (BPO)

• Structure: Fixed quantity and delivery schedule agreed upfront.
• Call-Off: Not applicable; deliveries follow the fixed schedule.
• Commitment: Supplier commits to full quantity; BU commits to off-take.
• Usage: High-volume uniform demand (e.g., 1,000 units/month for 12 months at fixed price).

Type 3: Rate Contract

• Structure: Unit rate fixed for a period (12–36 months); quantity estimated but not guaranteed.
• Call-Off: BUs place orders at the fixed rate; no re-quotation.
• Price Adjustment: Annual CPI-linked review with raw material indexation clause (if applicable).
• Usage: Professional services, maintenance contracts, utilities-like recurring services.

5. Competitive Tendering & Award Process

All framework agreements are established via competitive RFQ process per P-POL-003:

1. RFQ issued to minimum 3 qualified suppliers (for routine commodities) or 5+ (strategic items).
2. Evaluation Criteria: Best value across price, quality, delivery, financial stability, references.
3. Award: Framework is awarded to the best-value supplier; standby suppliers may be engaged for capacity backup.
4. Framework Term: Standard term is 2 years, renewable for up to 1 additional year (3+1 structure).
5. Renegotiation: At end of term, framework is re-tendered; incumbent supplier may recompete.

6. Call-Off Procedure

Once a framework is activated, BUs place call-off orders via the following simplified procedure:

1. BU Procurement raises a PO in Oracle, referencing the framework agreement number (e.g., 'Call-off under FAM-2024-001').
2. PO automatically inherits the framework terms: unit price, payment terms, delivery schedule, quality standards.
3. Supplier is notified of call-off and delivers against the PO.
4. No re-quotation or further negotiation is permitted.

Target cycle time from demand to PO issuance: ≤ 2 business days (vs. 10–15 days for standard RFQ).

7. Price Adjustment Mechanisms

Framework agreements include price adjustment clauses to address inflation and market changes:

CPI-Linked Review (Goods & Standard Services)

• Annual review: Price is adjusted by the UAE Consumer Price Index (CPI) change year-on-year.
• Floor/Ceiling: Price changes capped at +/– 3% per annum (unless extraordinary market events warrant exception).

Raw Material Indexation (Commodities)

• For commodities heavily dependent on raw material costs (steel, chemicals, energy), a separate indexation clause applies.
• Index: Price component is linked to an external index (e.g., London Metal Exchange for steel, Platts for energy).
• Quarterly true-up: Actual invoice prices are adjusted quarterly based on index changes.

8. Performance Monitoring & OTIF Tracking

Framework suppliers are held accountable via quarterly performance reviews:

Quarterly scorecards are prepared and shared with suppliers; poor performance triggers improvement discussions.

9. Right to Terminate for Underperformance

10. Framework Register & Governance

GSC maintains a centralized Framework Register in Oracle/SharePoint:

• Register contents: Framework ID, description, supplier name, term dates, unit prices, annual volume estimate, category manager.
• Expiry alerts: System alerts Category Manager 90 days before framework expires; renewal decision required by 60-day mark.
• Monthly utilization report: Call-off volumes vs. forecast tracked and reported to BU Heads.
• Annual review: Category Manager conducts value-for-money assessment; if supplier performance or market conditions have shifted significantly, framework is re-tendered.

11. Demand Planning & Volume Forecasting

BUs provide annual demand forecasts to GSC by October 31st of each year:

• Forecasts by category: Expected volumes (units, value, mix) for the upcoming calendar year.
• Forecasts inform framework negotiations: Volume commitments and pricing are anchored on forecast quantities.
• Forecast accuracy: BUs are accountable for forecast accuracy; significant variances (>20%) trigger review and corrective actions.

12. Reference Forms

• Form F-FRM-01 — Framework Agreement Master Terms & Conditions
• Form F-FRM-02 — Framework RFQ Template
• Form F-FRM-03 — Call-Off Purchase Order

13. Definitions & Acronyms